• Two market perspectives:…..-Leading indicators of a market top (Market Watch)…..-S&P 500 Has Biggest Gain in Two Months on China Signals (Bloomberg)
• U.S. lets China bypass Wall Street for Treasury orders (Reuters)
• JP Morgan’s Isn’t the Only Bad Bank Chart (Barron’s)
• Getting to Retirement With Minimal Financial Risk (NYT)
• The Magnetar Fallout: Who’s Been Charged, Has Settled, or is Now Being Investigated? (Pro Pubica)
• The Right Way to Try to Buy Happiness (NYT)
• Greeks embrace some new myths about life with the euro (Reuters)
• Would Romney Be Another Bill Clinton or Another George W. Bush? (NYT)
• Former Record Label Exec Ethan Kaplan: Duh, Of Course More File Sharing Leads To More Sales (Tech Dirt) see also What Filesharing Studies Really Say – Conclusions and Links (Zero Paid)

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

“…System Two’s chief executive is Anupam Ghose, who most recently was a founding partner and co-president of Roc Capital Management, a Deutsche Bank AG DBK.XE +2.35% spinoff that incorporates research by a team of analysts in India with a quant-trading system in New York. Roc launched with more than $1 billion, now has about $800 million, say people familiar with the firm…”

“…System Two’s chief executive is Anupam Ghose, who most recently was a founding partner and co-president of Roc Capital Management, a Deutsche Bank AG DBK.XE +2.30% spinoff that incorporates research by a team of analysts in India with a quant-trading system in New York. Roc launched with more than $1 billion, now has about $800 million, say people familiar with the firm…”

Apparently people have figured out that costs matter and have elected not to give their hard-earned money to Wall Street. My wife’s 403b is with Vanguard and my son just started a Roth IRA there. I own Vanguard MFs and ETFs in my IRA.

Expect more JPM types of blow-ups since they will have to stretch more in the finest LTCM-like fashion to make profits instead of relying on the cash flow from the muppets.

I have to admit that I don’t know a lot about the way the FDIC operates, but why can’t they just make a determination not to insure some so called “banks”” depositors? I can guarantee if people knew that their deposits weren’t insured, then they wouldn’t put their money into “banks” that play fast and loose with their deposits, and they’d switch to a bank where their money was safe.

well techy, if they want to dump their treasuries, and if it were to actually drive the interest rates up, wouldn’t they cutting their own throats? since they are an export based economy, they need to export, and there is no bigger import market than the US. of course if they sold all of their treasuries at one time, they would take a huge loss on their investments. and of course it might drive the interest rates down too. as the flight to safety would take place again. and having dumped the treasuries, and trashed their biggest market (maybe locking them selves out of it too) they then would have a really massive employment problem (and a huge political one to boot). all that unemployment breeds unrest and revolution.

Some info on FDIC limits is below. The big moral hazard problem now is that when everything was blowing up in 2008-2009, the US government extended FDIC coverage to virttually everything and backstopped money market funds as well. So the players with more than $250k now believe that all of these “cash” types of deposits will be made good in the event of a systemic collapse. As a result, they are careful about small banks that can go bust based on local conditions but are not concerned about TBTF institutions or brokerage money market funds, so that type of free market control is now missing. However, as MF Global showed, things can still go wrong.

The FDIC insures deposits that a person holds in one insured bank separately from any deposits that the person owns in another separately chartered insured bank. For example, if a person has a certificate of deposit at Bank A and has a certificate of deposit at Bank B, the accounts would each be insured separately up to $250,000. Funds deposited in separate branches of the same insured bank are not separately insured.

The FDIC provides separate insurance coverage for funds depositors may have in different categories of legal ownership. The FDIC refers to these different categories as “ownership categories.” This means that a bank customer who has multiple accounts may qualify for more than $250,000 in insurance coverage if the customer’s funds are deposited in different ownership categories and the requirements for each ownership category are met.”

think they would have to decide to decide all or none depositors in a bank. and if they decided to not insure, that would probably kill that bank. we have 0 tolerance for banks loosing deposit money. that includes business too. if the FDIC didn’t exist, we would have repeated the 1930 bank runs. and many banks would be gone. along with untold billions in deposits. and if we think 2007-2008 was bad. this would have been many magnitudes worse

Thank you for your explanations. What I still don’t understand is why, when it becomes clear that our regulatory agencies are unable to regulate (and they even TELL us that they can’t do it, like in the article I linked to above), why the FDIC doesn’t step in to some of these “banks” and say “Hey, we’re sorry- we are unable to regulate you because we don’t have the technology and/or staff, so we’re no longer going to insure your depositors”. Then the depositors would say “oh, shit!”, and pull their money out and put it somewhere else that is insured. Why can’t they do that? Because it would cause bank runs? Maybe bank runs are what some of these banks need to straighten themselves out.

MF global wasn’t a bank. and in fact if you have a 401k or any other type of retirement account. there isn’t any thing insuring those accounts either. if the company ‘holding’ your retirement account fails, you are out of luck. not sure if that wouldn’t also be a taxable event too.

willid3: yeah, I found that out with the AIG crisis. My employer invests our retirement accounts with AIG (which gobbled up our original company, VALIC). I found out that my state will insure up to $100,000 of that, and I’m on my own if the rest is somehow lost. Doesn’t seem like a very stable way to set up a retirement account to me, but it’s not like we have much of a choice.

mrg:
depends on the state that you live in as to what is insured, but typically it goes like this: the only thing that they insure is insurance based products (AIG/VALIC is an annuity company). typically they only insure the fixed subaccounts, and not the variable. so if you have all or some of your account in the fixed/guaranteed bucket, the state has funds (paid into by the insurance companies) that will make you whole, up to the state limit. if you had everything in the VALIC Equity fund, and it went due south, that is all on you.
willid3: no, it is not a taxable event, but you also can’t write it off as a loss.

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About Barry Ritholtz

Ritholtz has been observing capital markets with a critical eye for 20 years. With a background in math & sciences and a law school degree, he is not your typical Wall St. persona. He left Law for Finance, working as a trader, researcher and strategist before graduating to asset managementRead More...

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